In this weeks Leading the Way blog, Helen Addis, Social Responsibility and Customer Welfare Manager, discusses the upcoming Debt Respite Scheme and considers what this means for Bristow & Sutor, its clients and its customers.
Over to Helen …
The Debt Respite Scheme (Breathing Space) guidance has been a hot topic of conversation within the enforcement industry for a long time and will finally come into effect on Tuesday 4th May 2021. The idea of this new legislation is to give more time to debtors who are struggling with their debts to seek help from qualified debt advisors to find a resolution. Qualifying debts include a wide range of commercial and government debts. Nothing in the regulations change what a customer is contracted to pay.
So, what does ‘Breathing Space’ mean?
There are two different types to be aware of, a standard breathing space and a mental health crisis breathing space. A successful standard breathing space application will see all enforcement action on qualifying debts paused for up to 60 days, with a freeze placed on additional interest and charges. A mental health crisis breathing space is only available to someone who is receiving mental health crisis treatment and lasts as long as that treatment requires, plus an additional 30 days.
Whilst we cannot enforce a debt during a Breathing Space, a debtor is still legally required to pay their ongoing liabilities. If there is a controlled goods agreement in place with Bristow & Sutor and a repayment plan has been agreed between the debtor and our Enforcement Agent (EA), the debtor should continue to make payments under that agreement. Any unpaid instalments may still be treated as a breach of repayment plans.
Who is this for?
It is important to recognise that debtors can only be granted a breathing space after being assessed by a qualified debt adviser and this solution may not be appropriate for every debtor. Standard breathing space is not a process that can be consistently repeated, as applications will be rejected if a successful application has previously been granted within the last 12 months. There is no limit to how many times a debtor can enter a mental health crisis breathing space. During a standard breathing space, a debt adviser must carry out a midway review which could see the Breathing Space cancelled if the debtor has failed to comply with their obligations. These may include paying rent, utility bills or any ongoing cost, as well as staying in regular contact with the debt advice professional to actively explore solutions.
If a person can afford to pay their debts with simple budgeting adjustments or if they have assets that could easily be sold to clear debt, a breathing space application is highly unlikely to be applied. The purpose of breathing space initiatives is to support those who genuinely cannot pay or are vulnerable, helping them to improve their financial situation for the long-term.
What must Local Authorities do?
Bristow & Sutor recommends that all processes related to Breathing Space are tried and tested by our clients as soon as possible. All procedures must be ready to run smoothly and effectively by the time this legislation comes into effect in 3 months’ time.
If a client of Bristow & Sutor is notified that a debt owed is in a Breathing Space agreement, they must let us know as soon as possible so that all activities related to that debt, such as visits, can stop. This process must start the day after the debtor’s details are put onto the Breathing Space register. When Local Authorities receive a notification, they must also search their own records to identify the debt owed by the debtor and feedback to the debt advisor and identify any other debts owed to the Council. Many of our clients have already begun preparing for these processes within their teams and we hope that any who have not will be doing so imminently. We are here as ever to support our clients through these changes.
How will Bristow & Sutor respond?
Bristow & Sutor has a long history of successfully supporting vulnerable people in conjunction with both the Debt Advice sector and Local Authorities. Our EAs (Enforcement Agents) regularly signpost people towards advice and refer them to welfare teams when they identify potential cases of vulnerability.
I joined Bristow & Sutor as part of a social responsibility and customer welfare drive that is continuing to ensure social value is present and effective within the business. Our commitment to this approach means that no expansive change is required to how we operate, simply an assurance that we will ensure all of our colleagues understand how these new regulations and processes must be followed ahead of the rollout in May. Beyond meeting the needs of legislation, Bristow & Sutor continues to attempt to add social value to the communities we engage with and remains committed to its ethos of being cool, calm and collected.
Applying the Breathing Space legislation is simply the next step in our ongoing efforts to provide the best service and support possible. Bristow & Sutor will do everything it can to promote best practice and will work with both Local Authority customers and debt advice professionals to ensure all communications related to Breathing Space remain clear and effective.
We will be joined by Sam Nurse, Director & Chair of Money Advice Hub and member of Bristow & Sutor’s Independent Advisory Panel, to discuss Breathing Space at length during our next series of webinars. These are taking place at 3pm on Tuesday February 9th and 10am on Thursday February 11th. To register your interest in attending please click here.